Hungary: Euro adoption plans hinge on fiscal path – Standard Chartered

Standard Chartered’s Saabir Salad analyzes Hungary’s fiscal outlook and its implications for Euro adoption and the Forint. The Tisza government’s 2027 budget and new medium-term fiscal plan, due this month, are seen as key tests of credibility. The bank now forecasts Hungary’s deficit at 7.5% of GDP in 2026, narrowing to about 5% in 2027 and below 3% by 2029–2030.

Fiscal consolidation tied to euro entry

"Hungary’s 2027 budget and new medium-term fiscal plan, both due this month, are the most significant domestic risk events for the rest of 2026."

"They will be the first full fiscal statement from the Tisza Party-led government, which took office in May, and the first substantive test of whether its euro adoption ambitions are backed by credible numbers."

"We expect the fiscal plan to project a narrowing of the fiscal deficit from c.7.5% of GDP in 2026 to close to 5% in 2027 (broadly in line with our revised 5.3% forecast), and below 3% by 2029 or 2030."

"Hungary has been under an EU Excessive Deficit Procedure (EDP) since July 2024, when the European Council judged the 2023 deficit of 6.7% of GDP to be excessive and set a corrective path intended to bring it below 3% by around this year."

"The consolidation package is likely to combine front-loaded cost savings from reduced waste and spending on procurement with a new wealth tax, while leaving room for the higher health-care and pension spending already pledged by Tisza."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)